Trustees: Appointment, Removal and Retirement Flashcards
Who can be a trustee?
Most adults with mental capacity can be appointed to act as a trustee (there are certain statutory disqualifications in relation to more specialised trusts, such as charity trusts and pension trusts, but these are outside the scope of this manual).
A company can also act as a trustee (whether alone or in conjunction with human trustees) so long as it is authorised to do so by its constitutional documents. ‘Trust corporations’ are corporate trustees that carry out trust business for profit.
Min. and max. number of trustees
Trusts over land should have at least two human trustees or a sole trust corporation. But they cannot have more than four trustees.
Trusts of personalty can have a sole trustee and can have more than four trustees.
How can trustees retire?
In the absence of any express provision in the declaration of trust, trustees will commonly retire pursuant to the provisions of the TA 1925. If there will be less than two trustees left in office once the outgoing trustee retires, a replacement trustee must be appointed.
Section 39 of the TA 1925 allows a trustee to retire without being replaced.
Conditions:
(a) there will be two trustees or a trust corporation left
(b) the trustee retires by deed
(c) the other trustees consent by deed.
Who appoints the new trustee?
(a) the person nominated in the trust instrument to exercise the s 36 power, but if none
(b) the continuing trustee(s) (which includes the retiring trustee if they are willing to join in the appointment).
Appointment must be in writing
Retiring trustees and liability for breaches
A retiring trustee remains liable for their own breaches but will not be liable for future breaches unless they retired to facilitate the breaches.
Removal and or replacement of a trustee: grounds for replacing a trustee
Grounds for replacing a trustee:
(a) the trustee is dead
(b) remains outside the UK for more than 12 months
(c) desires to be discharged (retire)
(d) refuses to act (disclaims)
(e) is unfit to act
(f) is incapable of acting (eg mental
or physical incapacity)
(g) is a minor.
Removal and or replacement of a trustee: Who effects the replacement?
(a) the person nominated in the trust instrument to exercise the s 36 power, but if none:
(b) the continuing trustee(s) including a retiring trustee if they are willing to join in the appointment;
(c) if all trustees have died, the PRs of the last surviving trustee.
Appointment of additional trustees
The court will appoint a new trustee if it is expedient to do so and it is otherwise inexpedient, difficult
or impractical to appoint without the court’s assistance.
The court makes the appointment following an application by the trustees or the beneficiaries.
Appointment of additional trustees: Who makes the appointment?:
The person nominated in the trust
instrument or, if none, the continuing trustee(s).
There can be no more than four trustees once the additional appointments are made.
The appointment must be in writing.
Death of a trustee
If two or more trustees are appointed, they will hold legal title to trust property as joint tenants, with the result that if one dies, the legal title will devolve to the surviving trustees (TA 1925, s 18).
If there is only one surviving trustee left, that trustee should be advised to appoint a replacement trustee under s 36(1) of the TA 1925 to ensure the continuity of trust administration.
Appointment of an attorney
If a trustee knows they will not be able to exercise their functions for a certain period of time, they should delegate those functions to an attorney. However, they should choose their attorney with care, because they will remain liable for the acts of that attorney.
